Uncle Chua

Simple Way of Investing
The illiterate but smart way

I read how Uncle Chua made $17 millions (it was not stated in which currency, Malaysian or Singapore dollars)  from stocks in these postings:

The story of Uncle Chua

Thursday, May 14, 2009

http://myinvestingnotes.blogspot.com/2009/05/story-of-uncle-chua.html

Value Investing Made Simple by Uncle Chua

Just for Laugh ...

Sunday, 16 January 2011

http://createwealth8888.blogspot.com/

True story Or made up?  Most of us are unlikely to believe the story but agree that it is possible to do so. It isn’t important whether this is a true story or not. It is a nice case study for us to learn from. 

Uncle Chua is a retired businessman with cash.  He has been investing in stock for a long time. “Uncle Chua explained: "I bought some of them as early as in the 60s. I was then in my 50s and retired”. In 1997, he would be at least in his 80s when “In mid-1997, when the Asian Financial Crisis started sweeping across regional markets, Uncle Chua didn't sell a single share. Instead, he started buying shares - again ALL blue chips and ONLY blue chips”

How he did it?

It took a lot of guts.

I presume the following:

He had lot of experiences in stocks and gone through many cycles up and downturns of the market.   Though he was illiterate and may not studied the history of the stock markets, he was confident from his experience that eventually markets recovered.

So he may not know about Baron Rothchild’s, John Templeton and Ben Graham, he did it correctly – “buy when there is bloodshed in the street.”

His illiteracy also helped in that he may not be exposed to much investment pornography that may derailed him from his single minded and simple investing style.  He would also not monitor his stock daily as he does not even know  “how to use the Teletext facility on his TV set,” sparing him the antics of Mr Market.  He truly exemplified what Warren Buffet said, "Success in investing doesn't correlate with I.Q. once you're above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."

He must be very rich to continue investing in 1997 with “couple of hundred thousand,”  especially at the age of 80+.  This amount should only be a small portion of his total wealth as he is unlikely to risk everything in the market at his age.  There is also no need for him to do so.  That is why in this world, the rich get richer.

Most of us may not be in the same position as him – with so much money to spare.  However, we need not do it to the same extent but we must take advantage of the situation to invest some of our savings, on what Ben Graham would call,  “very satisfactory terms."  This would minimize our regrets which may cause us to charge into the peak of the market after its recovery like Jason Zweig’s “sheepish bulls”.

References:

 

Jason Zweig, If You Think Worst Is Over, Take Benjamin Graham's Advice,

May 26, 2009.

http://online.wsj.com/article/SB124302634866648217.html

In the depths of that crash, near the end of 1974, Mr. Graham gave a speech in which he correctly forecast a period of "many years" in which "stock prices may languish."

Then he startled his listeners by pointing out this was good news, not bad: "The true investor would be pleased, rather than discouraged, at the prospect of investing his new savings on very satisfactory terms." Mr. Graham added a more startling note: Investors would be "enviably fortunate" to benefit from the "advantages" of a long bear market.

Uncle Chua's Portfolio & Dividend Income

http://myinvestingnotes.blogspot.com/2009/05/uncle-chuas-portfolio-dividend-income.html

This is a true story told by the remisier in his book. The story of Uncle Chua, an elderly man, who was barely literate and knew nothing about market tantrums or even how to use the Teletext facility on his TV set to monitor his portfolio of stocks. He managed to accumulate an incredible wealth in excess of $17,000,000 (Seventeen million dollars) by investing in stocks and shares alone.

Here is Uncle Chua's portfolio & dividend income, reproduced here as accurately as was depicted in the book: http://spreadsheets.google.com/pub?key=r5DhwS2nWTiIAK0pDCIPD-Q

He made it all from the market with an initial capital of a couple of hundred thousand dollars that he saved from many years of running a business in the shipping industry that he started in his late 30s.

Was this a miracle, pure luck, a fairy tale or bullshit? Let's learn a few lessons from this story later.

The story of Uncle Chua

Thursday, May 14, 2009

http://myinvestingnotes.blogspot.com/2009/05/story-of-uncle-chua.html

All the shares he dealt in were ALL blue chip stocks.

In mid-1997, when the Asian Financial Crisis started sweeping across regional markets, Uncle Chua didn't sell a single share. Instead, he started buying shares - again ALL blue chips and ONLY blue chips. He bought bit by bit as the STI index broke one low after another. This was unlike others who began panicking and dumping their shares to preserve what they had left.

Pretty soon, the index was somewhere in the 800-plus region, almost the lowest level then. But many were still convinced that the market could fall further. After all, there was blood on the streets and panic and pessimism everywhere. All news that was coming out was never assuring and very demoralizing.

Uncle Chua's gutsiness and calmness in such a chaotic situation was very puzzling.

However, Uncle Chua's portfolio statement comprised stocks of astronomical value. The most unbelievable part was that his entire portfolio consisted of nothing else but blue chip stocks. There was not even a single junk stock in the list. How did he pick those stocks?

Uncle Chua explained: "I bought some of them as early as in the 60s. I was then in my 50s and retired. I reckoned that I needed to have some sort of passive income and so I made a simple comparison between bank fixed deposits and stock dividends. I decided that the latter offered a better return, and so based on this very simple reasoning, I looked through the Chinese newspapers to select and buy into companies which paid good dividends that would maintain my family."

"Of course, I also made sure that the management team of the companies I bought was committed and acted in favour of shareholder interests. That's why I asked you today, to tell me what the management said in this annual report about its future plans to steer the company and how much dividends they are proposing this year."

"Those stocks that I have bought also often issued bonus shares. Some even did stock splits, and with the dividends accrued, I reinvested everything back into those stocks I owned. That's how my portfolio grew to this size, but it certainly took me many years..."

 

Value Investing Made Simple by Uncle Chua

Just for Laugh ...

Sunday, 16 January 2011

http://createwealth8888.blogspot.com/

Who is the Ultimate Value Investor?

An elderly man, who was barely literate and knew nothing about market tantrums or even how to use the Teletext facility on his TV set to monitor his portfolio of stocks.

I somewhat believe the “story” except this part:

"Of course, I also made sure that the management team of the companies I bought was committed and acted in favour of shareholder interests. That's why I asked you today, to tell me what the management said in this annual report about its future plans to steer the company and how much dividends they are proposing this year."

But, yes what Uncle Chua did it correct and it is possible for an “illiterate” person with money to make more money in this manner from the Singapore Stock Market.  He may not know the intricate working of the market but at least he is also not affected by the “noises”.

It needs a lot of gut but ignorance something is a bliss.  Read Taleb – too much knowledge can be harmful.  Too much data does not let you make intelligent decisions.

Uncle Chua's Portfolio & Dividend Income : Sheet1	Profit from a REAL-LIFE success story of a retail investor who picked the right stocks.
	Estate of Chua-----DECEASED
	Uncle Chua's Portfolio & Dividend Income
	SCHEDULE OF DIVIDENDS (01/01/2001 - 31/12/2001)
Date of Payment	Name of Company	Warrant No	No. of Shares	Gross Dividend	Tax	Net Dividend
	Singapore Dividends
1/6/2001	Sing Tel		30200	2265	577.58	1687.42
1/26/2001	SPH		33858	16929	4316.9	12612.1
1/26/2001	SPH		33858	27086.4	6907.03	20179.37
1/22/2001	Natsteel Ltd		100000	81879.19	20879.19	61000
3/9/2001	Times Publishing		5000	450	110.25	339.75
3/16/2001	Asia Pacific Breweries		100312	11957.72	2929.64	9028.08
3/20/2001	F&N		92500	11028.87	2702.07	8326.8
4/12/2001	WBL		15300	306	74.97	231.03
4/12/2001	Robinson & Co		18429	1474.32	361.21	1113.11
5/3/2001	SPH		33858	6771.6	1659.04	5112.56
5/3/2001	Straits Trading		26340	790.2	193.6	596.6
5/22/2001	OUB		84720	5930.4	1452.95	4477.45
5/22/2001	OUB		84720	3388.8	830.26	2558.54
5/31/2001	DBS		24176	3868.16	947.7	2920.46
5/31/2001	DBS		24176	3626.4	888.47	2737.93
6/6/2001	Keppel Fels		10000	300	73.5	226.5
6/13/2001	TIBS		300	10.5	2.57	7.93
6/13/2001	OCBC		210000	27300	6688.5	20611.5
6/13/2001	OCBC		210000	21000	5145	15855
6/15/2001	UOB		198030	49507	12129.34	37377.66
6/19/2001	Keppel Capital		56250	3375	826.88	2548.12
6/20/2001	Keppel Corp		11250	1462.5	358.31	1104.19
6/20/2001	United Engineers		26666	1066.64	261.33	805.31
6/29/2001	Sembcorp		14756	363.9	90.35	273.55
7/6/2001	Asia Pacific Breweries		100312	11957.72	2929.64	9028.08
7/9/2001	F&N		92520	11028.87	2702.07	8326.8
7/10/2001	Times Publishing		5000	331.13	81.13	250
7/30/2001	SIA		35000	7000	1715	5285
8/20/2001	OUB		84720	4236	1037.82	3198.18
8/20/2001	OUB		84720	3388.8	830.26	2558.54
8/20/2001	DBS		24176	3384.8	829.24	2555.56
8/24/2001	WBL		15300	459	112.46	346.54
8/31/2001	UOB		198030	29704.5	7277.6	22426.9
9/4/2001	OCBC		210000	10500	2572.5	7927.5
9/26/2001	Sing Tel		30200	1661	406.95	1254.05
10/8/2001	Straits Trading		26340	526.8	129.07	397.73
11/16/2001	Robinson & Co		18429	4054.38	993.32	3061.06
11/22/2001	SIA		35000	1050	257.25	792.75
12/21/2001	TIBS		300	13.47	3.3	10.17
		Total		371434.07	92284.25	279149.82
	Malaysian Dividends
3/19/2001	Pub Fin F		8000	1260	Tax-Exempt	1260
		Total (RM)		1260		1260
	Singapore Dividends
1/22/2001	Natsteel Ltd		100000	10000	Tax-Exempt	10000
3/14/2001	Cerebros		29000	1740	Tax-Exempt	1740
3/14/2001	Cerebros		29000	1160	Tax-Exempt	1160
		Total		12900		12900
Dated: 22 November, 2002